Corporation Tax Act 2010 section 74

Disposals of new shares

Section 74 restricts or denies share loss relief when a company disposes of shares that have been treated as the same holding as previously held shares following a reorganisation of share capital.

• When shares disposed of ("new shares") are identified with previously held shares ("old shares") under share reorganisation rules, share loss relief is only available if Condition A or Condition B is satisfied
• Condition A requires that the company would have qualified for share loss relief had it disposed of the old shares at arm's length at the time of the reorganisation and incurred an allowable loss
• Condition B is met where the company provided fresh consideration in money or money's worth for the new shares, beyond what would normally arise in a straightforward reorganisation
• Where Condition B applies, the share loss relief is capped at the amount or value of that fresh consideration that was deducted in computing the loss on disposal